DELL Technologies: a leading manufacturer of PCs and servers for AI

Dell Technologies (DELL) is one of the largest technology companies in the world, specializing in the production and sale of computer hardware, software, and IT solutions. The company divides its operations into two main segments: Infrastructure Solutions Group (ISG) and Client Solutions Group (CSG). The ISG segment provides solutions for digital transformation, including artificial intelligence (AI), machine learning, data analytics, as well as modern and traditional data storage solutions. The CSG segment focuses on the production of branded personal computers, including laptops, desktop PCs, workstations, and peripheral devices such as monitors, keyboards, and webcams.

Investment attractiveness factors:

Positive technical outlook and attractive market multiples. After the publication of financial results for the third quarter of the 2025 fiscal year, Dell's shares went through a correction phase, reaching the lowest levels in the last three months. However, they soon returned to an upward trend. Currently, the RSI technical indicator remains below the overbought zone, indicating potential for further price growth. Dell’s market multiples look attractive: the forward P/E ratio is 14, slightly above the company’s historical values but significantly lower than the sector average (24) and the S&P 500 index (23). The forward P/S ratio is 0.8, which is well below the sector average (3.28), confirming that Dell’s shares are undervalued.

A new cycle of computer device upgrades is expected to begin in 2025. After significant sales peaks related to the COVID-19 pandemic, many of these devices will reach the end of their life cycle, which typically lasts 3-4 years. Despite the previously anticipated substantial market growth, the actual growth in 2024 was only 1% year-over-year. According to updated IDC forecasts, 2025 is expected to be the year the PC market recovers. Key growth drivers will include several factors: the mass obsolescence of devices purchased in previous years, the end of support for Windows 10 operating system in October 2025, and increased demand for computers with AI integration. IDC forecasts a 4.3% growth in the PC market in 2025, which should positively impact Dell’s largest segment, CSG.

The AI direction will be the strongest growth driver for the ISG segment. Dell remains a leader in the data center supply segment alongside HP and SMCI, making them key players in infrastructure for training AI algorithms. In the first nine months of the 2025 fiscal year, revenue from servers and network equipment in the ISG segment grew by 60% year-over-year. According to Bloomberg analysts’ consensus, ISG revenue is expected to increase by 30% year-over-year in the 2025 fiscal year, with an additional 15% growth in the 2026 fiscal year. This growth is driven by increased demand for AI servers, with key drivers being the delivery of new NVIDIA GB200 chips and US government AI support programs. An additional growth factor could be the redistribution of market share from SMCI to Dell, as SMCI faces suspicions of violating US sanctions, reducing customer confidence and encouraging them to switch to a more stable partner.

The target price for DELL shares is $152.58.